PWSC(97-98)77
For discussion
on 26 November 1997


ITEM FOR PUBLIC WORKS
SUBCOMMITTEE OF FINANCE COMMITTEE

HEAD 703 - BUILDINGS
Support - Others
148GK - Customs building in container port area, Kwai Chung

Members are invited to recommend to Finance Committee the upgrading of 148GK to Category A at an estimated cost of $559.3 million in money-of-the-day prices for the construction of a customs building in container port area, Kwai Chung.

PROBLEM

The offices and facilities of the Customs and Excise Department (C&ED) to support its operations in the container terminals in Kwai Chung are scattered in different locations. The department cannot provide centralised and efficient cargo clearance services to traders in the container freight-related business.

PROPOSAL

2.The Director of Architectural Services (D Arch S), with the support of the Secretary for Trade and Industry, the Secretary for Security and the Secretary for the Treasury, proposes to upgrade 148GK to Category A at an estimated cost of $559.3 million in money-of-the-day (MOD) prices for the construction of a customs building in the Kwai Chung container port area.

PROJECT SCOPE AND NATURE

3.The scope of the project comprises the construction of a 10-storey main building, a three-storey dangerous goods store and sewage treatment facilities. The main building will include general office areas, detention rooms, stores, dog kennels, parking facilities and a dutiable commodities warehouse to support various C&ED units, such as the Ship Search and Cargo Command, the Office of Dutiable Commodities Administration and the Marine and Land Enforcement Command. The project will occupy a site of about 6 325 square metres, together with an existing cargo examination compound.

JUSTIFICATION

4.At present, customs officers provide services to container freight-related business from offices and facilities scattered over ten locations, e.g. Chai Wan, Tai Kok Tsui, Sheung Shui and Kwai Chung. Traders have to go to different places for different cargo clearance processes such as presenting shipping documents, making enquiries and collecting detained goods. In addition, as the existing cargo examinations compound and the operational offices concerned are separately located, officers have to travel daily between the office and the compound to carry out cargo examinations. The proposed project will put most of the C&ED's container freight-related operational offices and facilities under one roof and allow a centralised and more efficient customs clearance operation.

5.By law, traders must store consignments of dutiable commodities pending shipment or after importation in licensed private warehouses. When they cannot deliver the consignments to such warehouses within the latter's working hours, they will have to store the consignments in the government warehouse either in Hung Hom or Central. The traders responsible have to transport shut-out consignments in Kwai Chung over a long distance to the two government warehouses. The provision of the proposed warehouse will therefore minimise transportation time and help reduce container traffic on the road. Also, the design of the new warehouse will make the storage of whole containers possible, obviating the need for unloading and loading of goods in the containers.

6.C&ED's seized goods stores and dangerous goods stores are presently scattered throughout Hong ong, separated from operational offices including those responsible for container freight. This has led to higher operational costs and inefficiency particularly when officers have to handle seizures and arrests at the same time. As the project will provide offices for operational units and centralise the seized goods stores and dangerous goods stores now scattered in over ten locations, it will help reduce operational costs, improve enforcement efficiency and facilitate more efficient seizure management.

7.After the completion of the proposed project, C&ED will delease 15 offices and stores in commercial premises and godowns. This will lead to an annual savings of $13.22 million in rent and management charges.

8.Due to the lack of a public sewer connection nearby, the project will include sewage treatment facilities to cater for its own needs.

9.Hong Kong recorded a container throughput of 13.5 million Twenty-foot Container Equivalent Units (TEU) in 1996. The Port Development Board forecasts that the throughput will increase to 39 million TEU in 2016. In view of the significant growth, C&ED will not be able to provide an efficient service to the container freight trade if we do not proceed with the proposed project.

FINANCIAL IMPLICATIONS

10.We estimate the capital cost of the project to be $559.3 million in MOD prices (see paragraph 11 below), made up as follows -

$ million
(a) Piling 49.6
(b) Building 198.8
(c) Building services 96.9
(d) Drainage and external works 15.2
(e) Furniture and equipment 6.0
(f) Consultants' fees 12.2
(g) Contingencies 36.0
Sub-total414.7(at December
1996 prices)
(h) Inflation allowance144.6
Total559.3(in MOD
prices)

The construction floor area (CFA) of the project is 29 796 sq. m. The construction unit cost, excluding furniture and equipment and consultancy fees but including contingencies, is $13 307 per sq. m. at December 1996 prices. A breakdown by man-months of the estimate of consultants' fee is at the Enclosure.

11.Subject to approval, we will phase the expenditure as follows -

Year $ million
(Dec 1996)		 Price
adjustment
factor 		$ million
(MOD)
1998 - 99 51.4 1.16358 59.8
1999 - 2000 98.0 1.26830 124.3
2000 - 01 197.6 1.38244 273.2
2001 - 02 67.7 1.50686 102.0
414.7559.3

12.We have derived the MOD estimates on the basis of Government's forecast of trend labour and construction prices for the period 1998 to 2002. We will tender the works under a fixed-price lump sum contract because we can clearly define the scope of works in advance, leaving little room for uncertainty.

13.We estimate the additional annually recurrent expenditure of the project to be $12.86 million. Taking into account the anticipated savings of $13.22 million in rent and management charges mentioned in paragraph 7 above, we expect that there will be a net annual savings of $0.36 million.

PUBLIC CONSULTATION

14.We consulted the Kwai Tsing District Board in August 1995. Members supported the project and considered that it should be completed as soon as possible given the imminent need to cope with the expansion of the container port.

ENVIRONMENTAL IMPLICATIONS

15.D Arch S conducted a Preliminary Environmental Review (PER) of this project in August 1995. The Director of Environmental Protection vetted the PER and agreed that no Environmental Impact Assessment was necessary. D Arch S will control noise, dust and site run-off nuisances during construction through the implementation of appropriate mitigation measures in the relevant works contracts to comply with the established standards and guidelines.

LAND ACQUISITION

16.The project does not require land acquisition.

BACKGROUND INFORMATION

17.We upgraded 148GK to Category B in January 1996. We have engaged consultants at an estimated cost of $9.99 million to carry out outline schematic proposal, detailed design and prepare tender documents for the project. We charged this amount to the block allocation Subhead 3100GX " Project feasibility studies, minor investigations and consultancy fees for items in Category D of the Public Works Programme " . We plan to start the construction work of the proposed project in April 1998 for completion in August 2001.

18.The development will provide a total gross floor area of about 21 657 square metres on a site of about 6 325 square metres. It will achieve a plot ratio of 3.4, which is close to the maximum permissible plot ratio of 3.5 for the whole site.


Trade and Industry Bureau
November 1997

(LL287)

Enclosure to PWSC(97-98)77

148GK - Customs building in container port area, Kwai Chung

DETAILS OF CONSULTANTs' FEES

Breakdown of estimates for consultants' fees

Consultants'
staff costs		 Estimated
man
months 		Average
MPS
salary
point		 Multiplier
factor		 Estimated
fee
($ million)
(I) Architectural discipline
Contract administration Professional
Technical 		16
30		 40
16 		3
3		 2.66
1.67
Sub-total4.33
(II) Quantity surveying discipline
Contract administration Professional
Technical 		9
18		40
16 		3
3		1.50
1.00
Sub-total2.50
(III) Building services discipline
Contract administration Professional
Technical 		4.5
5		40
16 		3
3		0.75
0.28
Sub-total1.03
(IV) Site supervisionProfessional
Technical 		10.5
44.8		40
16 		2.1
2.1		1.22
1.75
Sub-total2.97
(V) Charges by Electrical & Mechanical Services Trading Fund (EMSTF)

Fees for advice for installation, testing and commissioning, and maintenance period monitoring

1.37
Total consultants' staff cost12.2

Notes

1.A multiplier factor of 3 is applied to the average MPS point to arrive at the full staff costs including the consultant's overheads and profit, as the staff will be employed in the consultant's offices (At 1.12.96, MPS pt. 40 = $55,390 p.m. and MPS pt. 16 = $18,595 p.m.). A multiplier factor of 2.1 is applied in the case of site staff supplied by the consultant.

2.The figure given above are based on estimates prepared by the Director of Architectural Services. We will only know the actual man months and actual fees when we have selected the consultants.

3.Upon its establishment on 1 August 1996 under the Trading Funds Ordinance, the EMSTF starts charging government departments for design and technical consultancy services for electrical and mechanical installations. The services rendered for this project cover the monitoring of installation testing and commissioning, including the maintenance period. The figures above are based on estimates prepared by the Director of Architectural Services. The actual cost for the service charges is subject to further negotiation between the Government and the EMSTF.

(LL287)